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United (UAL) Operates Flight Using 100% Sustainable Fuel

In an effort to decarbonize the airline industry in the United States, United Airlines Holdings, Inc. UAL flew an aircraft full of passengers using 100% sustainable aviation fuel (SAF) in one of its two engines for the first time in aviation history. The fuel was supplied by World Energy, North America's only commercial biofuel producer. The plane took off from Chicago’s O’Hare International Airport and landed at Washington, D.C.’s Reagan National Airport on Dec 1.

The flight operated with one of United Airlinaes’ new Boeing 737 MAX 8 jets with 500 gallons of SAF in one engine and 500 gallons of traditional jet fuel in the other. United Airlines CEO, Scott Kirby, stated “United continues to lead from the front when it comes to climate change action.” Sustainable aviation fuels offer the ability to match the performance of petroleum-based jet fuel, while emitting a fraction of its carbon footprint.

Currently, airlines are only permitted to use a maximum of 50% SAF on board. The SAF used on United Airlines flight was drop-in ready and is compatible with other aircraft fleets. Meanwhile, United Airlines has committed to buying nearly twice as much sustainable aviation fuel compared with the combined SAF commitments of the rest of the airlines across the globe.

According to the company, sustainable aviation fuel is the fastest and most efficient way to reduce emissions generated by aircraft. United Airlines also announced new corporate participants joining the Eco-Skies Alliance, an effort to collectively purchase 7.1 million gallons of SAF this year, including Microsoft, Salesforce and Visa.

For future flights, the airline also agreed to buy 1.5 billion gallons of SAF from Alder Fuels, which is enough to fly 57 million passengers. United Airlines can also buy up to 900 million gallons of additional SAF from Fulcrum BioEnergy.

Such eco-friendly moves by UAL are highly commendable and expected to reduce carbon emissions in the airline space.

Zacks Rank & Stocks to Consider

United Airlines currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Some better-ranked stocks in the broader Zacks Transportation sector are Knight-Swift Transportation Holdings Inc. KNX, Landstar System, Inc. LSTR and C.H. Robinson Worldwide, Inc. CHRW.

The long-term expected earnings per share (three to five years) growth rate for Knight-Swift is pegged at 15%. KNX is benefitting from an improvement in the adjusted operating ratio. Notably, the adjusted operating ratio improved to 82.8% in the first nine months of 2021 compared with 86.6% reported in the first nine months of 2020. In third-quarter 2021, the metric improved to 81.3% from 83.9% a year ago.  

This uptick in adjusted operating ratios is primarily driven by higher revenues in the Trucking, Logistics and Intermodal segments. Lower the value of the metric, the better. KNX has surged 36.8% in the past year. Knight-Swift sports a Zacks Rank #1.

The long-term expected earnings per share (three to five years) growth rate for Landstar is pegged at 12%. LSTR is benefitting from a gradual recovery in the economy and freight market conditions in the United States.

LSTR’s top and the bottom line increased substantially in each quarter from the third quarter of 2020, owing to robust revenues in the primary segment — truck transportation. LSTR has surged 25.7% in the past year. Landstar carries a Zacks Rank #2 (Buy).

The long-term expected earnings per share (three to five years) growth rate for C.H. Robinson is pegged at 9%. CHRW benefits from higher pricing and volumes across most of its service lines. Total revenues increased 42.4% year over year in the first nine months of 2021, with higher revenues across all the segments.

CHRW’s measures to reward its shareholders are encouraging. Driven by the tailwinds, the stock has moved up 1.4% in the past year. C.H. Robinson sports a Zacks Rank #1.

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United Airlines Holdings Inc (UAL): Free Stock Analysis Report
C.H. Robinson Worldwide, Inc. (CHRW): Free Stock Analysis Report
KnightSwift Transportation Holdings Inc. (KNX): Free Stock Analysis Report
Landstar System, Inc. (LSTR): Free Stock Analysis Report
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